Premium for Most Expensive Car Close to Income for Typical American Family

A Ferrari 250 GTO Berlinetta last week became easily the most expensive car sold at auction by when a bidder at a California auction agreed to buy it for $38.1 million, according to Hagerty Group LLC, a Traverse City, Michigan-based insurer and classic car database.

The annual insurance premium for a car with such high value likely exceeds the household income of the typical American family.

The 1962 two-seat coupe was estimated to sell for $60 million to $75 million at the Bonhams auction in Carmel, Calif. last week, according to Hagerty.

However, the car’s price easily surpassed the record for a car sold at any auction. In 2013 a record was set with of the sale of a 1954 Mercedes-Benz W196R Formula 1 racing car sold by Bonhams for $29.7 million.

The insurance premium for a collector car can vary broadly based on the owner’s overall risk profile, if the owner is insuring other cars, the vehicle’s garaging situation, where it’s located, said Jonathan Klinger, the public relations manager for Hagerty.

“You’re looking at $40,000 to $80,000, and with extreme cases it could be less or more,” Klinger said.

A Ferrari 250 GTO Berlinetta became the most expensive car sold at auction by when a bidder at a California auction agreed to buy it for $38.1 million.Photo courtesy of Bonhams

According to the U.S. Census Bureau, the U.S. median household income from 2008-1012 was $53,046.

Klinger wouldn’t say whether the car is insured with Hagerty. The buyer’s name was not disclosed.

According to Klinger, the reason the car is so coveted is that there were only 39 of them made. On top of that, Ferraris made during the 1950s to 1960s were among the winningest cars on the track, especially the GTO.

“The Ferrari GTO just has this Holy Grail feel to it,” Klinger said.

Additionally, the sports cars made at the time were the last of the “dual purpose cars,” built for both the road and the track.

“From the early ‘60s on road cars were road cars and race card became race cars,” Klinger said.

Lately the collector market has been hot, especially for European cars built in the same era as the GTO 250, said Eric Minoff, a specialist in collector motorcars for Bonhams.

“Post-war European sports cars right now are on an absolute tear,” Minoff said.

A Ferrari F40 sold at a Bonhams auction in 2010 for just under$ 400,00, and this year a similar vehicle sold for$ 1.4 million, he said.

“There’s been a pretty fair increase in the value of these cars over the last several years,” he said. “As an asset class, people have really taken to using them to sick money in essentially.”

The cars can be viewed as a good investment, and they can be driven, he added.

Collector car buyers can’t be assured they’ll get a good return on their investment, but the historical trend does seem to favor the investor.

“There’s no guarantee, but the person who bought that GTO in 1965, he paid $4,000 for it,” Minoff said.

While some collector cars, like the Ford Model Ts, and T-Birds, have remained flat in value as of late, cars from the 1970s and ’80s that have felt price pressure as the teenagers of that era come start to hit their peak in earning potential and they get a taste for nostalgia, according to Minoff.

The typical buyers of high-priced collector cars are male, and the majority of them have personal involvement in the auto industry or they come from families that were involved in the business in some way, Minoff said.

Winning buyers must pay in some form of cash, he said, adding, “we don’t accept trades or do financing.”

Of the top 10 most expensive cars ever sold at auction, all but the 1954 Mercedes-Benz were Ferraris.

The GTO, created by a team led by designer Giotto Bizzarrini, was debuted by Ferrari in 1962. According to Ferrari’s website, the car was built without a rear spoiler but one was added before its debut competition at the Sebring circuit in March 1962, with the GTO finishing second overall to a Ferrari 250 Testa Rossa.

“Amongst the numerous international successes of the 250 GTO were wins in the Tour de France in 1963 and 1964; GT class wins in the Targa Florio in 1962, 1963 and 1964; victories in the Tourist Trophy at Goodwood in 1962 and 1963; with GT category wins at Le Mans in 1962 and 1963, and in the Nurburgring 1000 km in 1963 and 1964,” the site states.

According to car aficionado website TopSpeed.com, the GTO 250 has a top speed of 174 mph and can go from 0 to 60 in 5.4 seconds.

“The Ferrari 250 GTO is the most desirable and valuable car in the world, and is surrounded with controversy and myth,” the site states. “Many people will argue that the best car in the world is the Ferrari GTO. While more modern supercars surpass the GTO in terms of performance, none excel better in both form and function.”

The following is a list compiled by Hagerty of the top 10 most expensive cars sold at auction: